It’s the crypto phenom of 2024. Polymarket lets you bet your crypto on what you think will be the outcome of a real-life event. And in this wild US election year, it’s been on fire.
Defying the regular polling, folks on Polymarket are giving Donald Trump a 61% chance of winning over Kamala Harris, falling 5% in the past 48 hours, with the betting amount hitting over $2.7 billion. So, if you’re into politics, there could be serious money to be made.
But could Polymarket get it wrong?
Sure, Polymarket was right about Joe Biden pulling out of the race. It gave the historic and controversial event a 70% chance of occurring a full 15 days before he actually made the announcement.
But there’s more to think about here:
- The site’s been dogged by allegations that a single French trader controls several accounts. And his large, bullish positions on Trump might not reflect the mood of the average American. Market watchers have said the French trader appears to be buying shares strategically rather than to inflate prices, according to CoinDesk.
- And this is related to point No. 1. US traders are not allowed to bet on Polymarket anyway. So, many of the people punting crypto on the US election are probably not American. They’re just someone, somewhere who’s willing to bet on Harris or Trump. Polymarket itself conducted “fresh checks” to make sure that the whales on its platform were indeed based abroad, Bloomberg’s reported.
- Polymarket and other prediction markets have also had their legality challenged by US regulators. So far, a US court has sided with the betting sites.
- Here’s another BIG one – Nate Silver, arguably the most credible election pollster, who’s been hired as an adviser by Polymarket itself, told CNBC he wouldn’t pay much attention to betting markets data rn because there’s not much historical data for them to rely on.
- Last but not least, the site is rife with a form of market manipulation called wash trading, according to blockchain analytics firms Chaos Labs and Inca Digital, Fortune reported. Wash trading is when the same person acts as both buyer and seller on a given trade.
Could Polymarket get it right tho?
Sure. And here’s why:
- People are betting their own money, or in this case, crypto. They believe the event they are betting on will happen and so they won’t mess around. They want to make money. So, it’s more reliable than the “shy voter” who might not tell the truth to a pollster.
- The pool of information betters have could arguably be greater than what pollsters get. The betters have their own friends and social circles who would speak more frankly to them. Imagine multiplying those social circles. That gives you a huge pool of people basically saying who they really think is going to win the election. That could be better than the samples pollsters get access to and try to get the truth out of. It’s also been called the “wisdom of the crowds.”
- Consider the strongly worded statement by Polymarket’s co-founder, Shayne Coplan, after the New York Times ran an article titled “The Crypto Website Where the Election Odds Swing in Trump’s Favour.”
Coplan denied any bias, saying: the idea of Polymarket is that “if people disagree with the market price, they have the opportunity to capitalize by buying the side they think is priced too low.”
Effectively, he’s saying that if you think these are manipulated betting odds, and by default you think Harris is winning, then sure, bet on Harris and make even more money.
And now to the point.
Trump or Harris, where are you putting your money?
